Applied Microbiology Inc. (AMBI) has been developing B. subtilis and related species as a host system for the production of recombinant protein products. B. subtilis has several advantages over E. coli (eg. It secretes protein products, is non-pathogenic, and does not produce endotoxins). AMBI has previously inactivated the alkaline and neutral protease (AP and NP) genes of B. subtilis. Work done under the Phase I proposal identified and characterized two residual proteases, a serine protease (RSP) and a cysteinyl protease (RCP), that together account for all remaining extracellular protease activity in the AP-/NP- strains constructed at AMBI. Under the Phase II proposal, we will clone and inactivate the two residual protease genes to produce a host free of extracellular protease activity. We will also develop means of expressing recombinant products throughout growth and in stationary cultures by the use of appropriate promoters. This will greatly increase product yield in protease free hosts. Finally, we will develop means to produce accurately processed recombinant proteins in B. subtilis.